Consultation on Proposed Amendments to the Code on Real Estate Investment Trusts

The Securities and Futures Commission ("SFC") considered that certain areas of the Code on the Real Estate Investment Trusts (“REIT”) could be updated to enhance Hong Kong’s regime for REITs in line with regulatory developments in other jurisdictions. On 9 June 2020, it issued a consultation paper to propose amendments to the Code on REIT (‘REIT Code”) 

Amendments are proposed to the REIT Code:-

  1. to allow a REIT to invest in minority-owned properties subject to various conditions;
  2. to allow a REIT to invest in property development projects in excess of the existing sub-limit of 10 percent of gross asset value subject to unit holder’s approval and other conditions;
  3. to increase the limit on aggregate borrowings from 45 percent to 50 percent; and
  4. to broadly align with the requirements under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

There are other miscellaneous amendments largely to better align requirements and codify existing practices.

The consultation paper was considered by Council with the assistance of the Investment Products and Financial Services Committee of the Law Society. A submission was prepared in response. In general, the Law Society welcomes the SFC’s proposals. Additional comments are also offered. 

A copy of the submission can be found on the Law Society's website:

http://www.hklawsoc.org.hk/pub_e/news/submissions/20200723.pdf

Jurisdictions: